Coventry 2Q profit rises, helped by settlement(2)

Health insurer Coventry Health Care Inc.'s second-quarter profit
jumped compared with a year earlier, thanks in part to a settlement
agreement for class-action litigation in Louisiana, but its new
2011 earnings forecast fell below Wall Street expectations.

The Bethesda, Md., company earned $224.5 million, or $1.51 per
share, in the three months that ended June 30. That includes an
adjustment of 68 cents per share tied to the settlement, which was
approved by a court during the quarter. Excluding that settlement,
it earned 83 cents per share.

Analysts surveyed by FactSet on average expected adjusted
earnings of 76 cents per share on $3.01 billion in revenue.

In the same quarter last year, Coventry earned $1 million, or a
penny per share, after it set aside $278 million to cover Louisiana
legal costs. The lawsuit accused the insurer's First Health Group
unit of violating notice provisions of Louisiana's Any Willing
Provider Act related to the treatment of injured workers with
worker's compensation claims.

The company recorded the gain in this year's second quarter
because it set aside more money than it needed.

Coventry shares sank $1.71, almost 5 percent, to $32.96 Friday
morning as the company's improved outlook remained short of analyst
expectations.

Coventry now expects 2011 adjusted earnings of between $2.80 and
$2.95 per share, up from its April forecast for $2.62 to $2.85 per
share. Analysts expect earnings of $2.99 per share.

Total premiums collected climbed nearly 7 percent to $2.74
billion in the second quarter, but the insurer said several
expenses rose too. Medical costs climbed 11 percent to $2.25
billion. Selling, general and administrative expenses were up 7
percent to $484.9 million.

Total medical membership was 3.4 million, a slight gain compared
to this year's first quarter and a 5-percent increase compared to
last year's second quarter.